Apple Launches Series of Updates at WWDC - Analyst Blog

By: Zacks.com

Posted: 6/3/2014 5:05:00 PM

Referenced Stocks: AAPL;FB;TWTR;MSFT;GOOGL

At the ongoing Worldwide Developers Conference (WWDC) held in
San Francisco,
Apple
(
AAPL
) unveiled a series of updates including iOS 8, OS X 10.10
Yosemite, Healthkit and a new programming language called Swift.

However, no new hardware was mentioned during the conference.

iOS 8 is equipped with a number of unique and improved features
including revamped notification features, an upgrade to the
keyboard's auto-correct functionality called QuickType; support for
third-party keyboards, improvements to mail, and the much-rumored
health tracking feature and companion app HealthKit.

Healthkit is Apple's new platform aimed at uniting health and
fitness data from a wide variety of apps and services. It can act
as an early-warning system that doctors can use to detect an
unexpected spike in blood pressure or perhaps even a missed
medication dosage.

Unlike in the past, Apple has opened up new elements of its iPhone
OS such as its keyboard and cloud storage systems for external
developers who can now create tools to customize these basic
functions of the iPhone.

Apple opened up the iPhone to third-party apps way back in 2008.
However, to date, only a handful of companies including
Facebook
(
FB
) and
Twitter
(
TWTR
) have been integrated into the basic functions of the iPhone's
core software.

Some of the newly-introduced changes in iOS 8 bear a strong
resemblance to what
Google
(
GOOGL
) has been doing for years with its rival smartphone operating
system, Android.

OS X Yosemite, the sequel to last year's OS X Mavericks, is the
upgraded version of the company's Mac Operating System.

The new OS includes a redesigned user interface much like iOS, as
well as new features focusing on seamless integration between Mac
and iOS devices and a new cloud storage system called iCloud Drive.
The seamless integration between the phone and computer is
something both Google and
Microsoft
(
MSFT
) could find hard to replicate, since Android has limited presence
in computing and Windows has limited presence in smartphones. The
convenience on the other hand is something customers could get used
to, thus helping retention.

During the ongoing WWDC, Apple also introduced a new coding
language called Swift, which will be used by iPhone app developers
going forward. The simplicity of the new language is believed to
enable faster development of apps.

Reportedly, Apple has expressed its intention to launch a new
platform that will transform devices running on the iOS mobile
operating system into remote control for lights, security systems
and other household appliances. The new platform will help Apple to
expand its footprint in the emerging Internet of Things (IoT)
market.

We believe Apple's foray into new industry spaces such as
automobiles, home and healthcare is a major positive catalyst and
will drive growth going forward. Moreover, the increased scope of
operation will also help it to combat continuously increasing
competition.

However, Apple's closest hardware competitor, Samsung, continues to
frequently update its entire product portfolio, which has increased
its popularity among buyers (both high income and low income level)
over the last one year. In comparison, Apple's strategy of
launching a yearly update of iPhone and iPad has not helped the
stock much.

Conclusion

Traditionally, Apple has refused to divulge details about its
product pipeline, which drove anticipation about its products.
Although this secrecy has helped it to gain significant attention
in the past (which also helped the stock price), we believe that
the game is not exactly the same any more. Continuously updating
bits and pieces right through the year and using the opportunity to
display technological lead is what drives share prices today.

Moreover, while new products like a cheaper iMac, larger-screen
iPhone, an iWatch or an updated Apple TV could be in the pipeline,
we believe that it is high time that Apple provided some
granularity about these products or at least provided a timeline
for the launch. As long as Apple maintains secrecy, jittery
investors will keep share prices under pressure.

Currently, Apple has a Zacks Rank #3 (Hold).

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